NYC Comptroller Report: Spotlight on the Potential Fiscal and Economic Impact for NYC

While recognizing that “forecasting is a difficult proposition in the best of times,” the recently released “Spotlight —Taking Trump’s Tariffs Seriously: the Fiscal and Economic Impact for NYC” report by the New York City Comptroller’s Office presents a range of scenarios — no recession, a mild recession, and a severe recession, which were formulated by Moody’s Analytics in March for the U.S. economy and their implications for the New York City economy and the City’s tax revenues.” The “reciprocal” tariffs announced by the White House on April 2nd lifted the U.S. effective tariff rate from 2% to well above 20%. All scenarios in the report assume that the effective U.S. tariff rate settles at 12.7%, but they “differ in the length of time the tariffs remain in place.” Although FY 2025 tax revenues in all three scenarios are expected to be above current budget expectations, and for the “city to therefore end its fiscal year on June 30th with larger current-year surplus (before adjusting for pre-payments).” However, the ”clear and cogent implication is that the city should make a sizable deposit in its rainy-day fund this year.” So that the city is better prepared for the impacts of an economic downturn, a deposit to the rainy-day fund in the range of $966 million and $1.15 billion has been suggested by the Comptroller’s office based on more recent estimates; and in addition, the recommendation that the General Reserve be increased by $1 billion to protect New Yorkers from looming federal funding cuts. Although the scenarios presented within the NYC Comptroller’s report focus on the economic implications of trade policy, further acknowledgement was noted that the fiscal and immigration policies of the Trump administration bring additional risks; and that “these policies and gyrations are sinking consumer and business confidence, raising inflation expectations, and damaging the safe haven status of the U.S. dollar and U.S. government debt.”

Source:    https://comptroller.nyc.gov/wp-content/uploads/documents/April-2025-Spotlight-1.pdf